Report: Chavez pushing regional leadership with Cuba

WASHINGTON — The U.S. intelligence community sees Cuban leader Raul Castro pursuing a cautious economic-reform agenda as Venezuelan President Hugo Chavez continues his push to challenge U.S. interests in Central and South America.

The conclusions were part of Director of National Intelligence Michael McConnell's annual threat-assessment report, presented Tuesday before the Senate Select Committee on Intelligence.

In his written statement, McConnell, speaking on behalf of 16 U.S. government intelligence agencies, painted a picture of Chavez as stung by a domestic electoral defeat and a worsening economy at home but determined to "unite Latin America, under his leadership, behind an anti-U.S., radical leftist agenda and to look to Cuba as a key ideological ally."

Much of the 45-page report deals with the Middle East and al Qaida, but it also contains some of the most detailed assessments to date of the intelligence community's perception of Latin America. It paints a favorable overall picture of a region consolidating its democracies, and it praises leaders in Colombia and Mexico for taking on drug-trafficking organizations and armed groups.

But it sees Chavez as a continuing threat to U.S. interests. It says that "a high priority" for Venezuela's leader will be supporting the indigenous socialist Bolivian president, Evo Morales, and gaining a foothold in Central America, thanks to his alliance with Nicaraguan President Daniel Ortega.

The report raises the prospect of a showdown in El Salvador, which is governed by a staunch U.S. ally in President Tony Saca.

"We expect Chavez to provide generous campaign funding to the (leftist) Farabundo Marti National Liberation Front (FMLN) in El Salvador in its bid to secure the presidency in the 2009 election," the statement says.

In Cuba, Raul Castro is seen taking "cautious, incremental steps" on some expanded role for the private sector, especially in agriculture. The U.S. intelligence community thinks that Raul Castro and the communist leadership have no plans for political reforms, but warns that Cuba faces difficult challenges.

"Policy missteps or the mishandling of a crisis by the leadership," McConnell said, "could lead to political instability in Cuba, raising the risk of mass migration."

The political situation is expected to "remain stable at least in the initial months following Fidel Castro's death" with the ruling elite and armed forces united behind his brother Raul Castro.

Fidel Castro hasn't appeared in public since July 2006.

The report notes Iran's growing ties with some nations, especially Venezuela. The two countries have signed agreements on everything from agriculture to automobile manufacturing and have "discussed cooperation on nuclear energy," but the U.S. intelligence community was "not aware of any significant developments as a result" of the talks.

McConnell expects Chavez to "remain unengaged" on the drug-trafficking front "unless the drug trade is perceived to damage his international image or threaten his political longevity."

The intelligence community sees Chavez spending more time bolstering his domestic support after a defeat over his referendum on constitutional revisions in December.

McConnell is critical of Chavez's socialist economic initiatives.

"Without question, policies being pursued by President Chavez have Venezuela on a path to ruin its economy," he says in the report.

The report also addresses the widely reported — but not publicly acknowledged — differences between Raul Castro and Chavez. The "sidelining of Fidel Castro in favor of his brother Raul may lead to a period of adjustment in Venezuela's relations with Cuba," McConnell says.

But the two are expected to "smooth over" any differences. Venezuela is thought to provide a net subsidy of $1 billion to Cuba, according to McConnell.